Real wages have been stagnant in America for decades now and
income inequality has grown immensely.In the aftermath of the
Great Recession, it’s only gotten worse. The Census Bureau
reported in September that the 15 percent of Americans (46.5
million) live below the poverty line. Government benefits like
food stamps and TANF help lift some of them above the line, but
millions still live below it.

So here's what you need to know about it.

How would it work?

It’s exactly how it sounds. The government would mail every
American over the age of 21 a check each month. That’s it.
Everyone is free to do what they like with it.

How would it be funded?

In 2012, there were 179 million Americans between the ages of 21
and 65 (when Social Security would kick in). The poverty line was
$11,945. Thus, giving each working-age American a basic income
equal to the poverty line would cost $2.14 trillion. For some
comparison, U.S. GDP was almost $16 trillion in 2012 and the
defense budget was $700 billion.

But a minimum income would also allow us to eliminate every
government benefit as well. Get rid of SNAP, TANF, housing
vouchers, the Earned Income tax credit and many others. Get rid
of them all. A
2012 Congressional Research Service report found that the
federal government spends approximately $750 billion each year on
benefits for low-income Americans and that rises to a clean
trillion when you factor in state programs. Eliminate all of
those and the net figure comes out to $1.2 trillion needed to pay
for a universal basic income, still a hefty sum.

That doesn’t mean there aren’t ways to pay for it. The CBO found
that a carbon tax would bring in nearly $100 billion a year for
instance. Revenue would also increase automatically since
everyone would have a basic income on which to pay taxes. The
government could also offer a basic income of $6,000 a year
instead of up to the poverty line. Funding a basic income for all
working-age adults would not be easy and would require a
substantial increase in the size of government, but it's not
impossible either.

What are the benefits of a basic income?

The clear one is that no American would live below the poverty
line. The U.S. has been waging the War on Poverty for a
generation now and still nearly 50 million Americans are below
the line. This would end that war with a decisive victory.

There are knock on effects as well. Americans would have greater
leverage to demand higher wages and better working conditions
from their employer thanks to the increased income security.
Families could allow one parent to take time off to raise their
kids. Eliminating the numerous different government welfare
programs would also lead to efficiency gains as adults would
simply receive their check in the mail and not have to waste time
filling out paperwork at numerous different offices.

What are the drawbacks of a basic income?

Economists have long shuddered at the thought of a basic income,
because it strongly disincentives work. However, a basic income
is just that: basic. Most adults would continue to work to earn
extra money. The employment effects would not be non-existent and
there may be an increase in part-time work. As Lowrey points out,
different studies have found the disincentive effects on work are
not as strong as economists feared.

Are there any real world examples?

Perhaps in the near future. Switzerland’s citizens will soon vote
on a referendum to give each working-age adult in Switzerland a
basic income of $2,800 (2,500 francs) per month. Supporters of
the initiative unloaded a dump truck of eight million coins, one
for every Swiss citizen, after they successfully gained 125,000
signatures and triggered the referendum. Other countries have
experimented with basic income in small areas, but none has done
so throughout an entire country as Switzerland is considering. If
the referendum passes, economists will certainly watch intently
to see its effects.

Does it have a chance in Congress?

No. Congress can't even keep the government open or pass a
budget, much less revamp our entire benefits program into a basic
income. However, there is some bipartisan agreement in academic
circles on the idea of a basic income. The American Enterprise
Institute's Charles Murray has written a
book on the subject and liberals have long dreamed of a
guaranteed basic income. Nevertheless, it will not be coming to
the U.S. anytime soon.